US Postal Service suspends pension contributions: How it will affect retirees?

The United States Postal Service announced on Thursday, April 9, that all employer contributions to the Federal Employees Retirement System (FERS) will be suspended.

This suspension will be effective from April 10, as the agency faces a severe financial crisis that can leave it without cash within 12 months.

Through cash conservation measures, around $2.5 billion will be saved. However, this will halt the $200 million in payments that USPS makes every other week to contribute to the federal pension program.

According to USPS Chief Financial Officer Luke Grossman, “The risk of the Postal Service and the American public from insufficient liquidity for postal operations dramatically outweighs any longer-term risk to the pension funds.”

The concerns of the cash crisis were raised last month by Postmaster General David Steiner, who warned that without major reforms, the agency would face a shortage of money by February 2027.

This potentially halted mail delivery nationwide. As per Steiner, this could be solved by increasing first-class stamp prices to 95 cents or $1 from the current 78 cents.

Another suggestion was to reduce delivery from six days per week to five or fewer.

Since 2007, the USPS has reported net losses of $118 billion as the volume of first-class mail has dropped to its lowest level since the late 1960s.

In 2025 alone, the agency posted a $9 billion loss.

Despite the suspension announcement, USPS emphasised that the pension suspension will not immediately impact current or future retirees.